iShares rolls out 8 London-listed single-country eurozone bond ETFs

May 9th, 2012 | By | Category: Fixed Income

iShares, the ETF platform of BlackRock, has announced the launch of eight London-listed single-country bond funds that provide precise and targeted exposure to the sovereign debt of eight of the larger eurozone countries.

iShares rolls out eight London-listed single-country eurozone bond ETFs

The ETFs, which charge just 0.20% pa, enable investors to build a precise asset allocation across the main eurozone government bond markets.

The launch reflects growing interest in fixed income ETFs generally, as well increased demand for more granular exposures within the asset class.

The demand for more targeted, country-specific exposure is especially relevant within the eurozone, which ranges from safe-haven Germany to higher-risk Belgium, Spain and Italy, to junk status Ireland, Portugal and Greece. Indeed, the latter three bailout-recipient countries are notable omissions from the iShares suite.

With eight different single-country funds, the suite of funds allows investors to build a precise asset allocation across the main eurozone government bond markets, enabling them to focus only on the highest-quality government bonds or tilt their portfolios towards higher-yield with lower-rated government debt.

The eight funds to launch on the London Stock Exchange (LSE) are:

iShares Barclays Austria Treasury Bond ETF (SAUT)

iShares Barclays Belgium Treasury Bond ETF (SBEL)

iShares Barclays Finland Treasury Bond ETF (SFIN)

iShares Barclays France Treasury Bond ETF (SFRB)

iShares Barclays Germany Treasury Bond ETF (SDEU)

iShares Barclays Italy Treasury Bond ETF (SITB)

iShares Barclays Netherlands Treasury Bond ETF (SNLD)

iShares Barclays Spain Treasury Bond ETF (SESP)

The ETFs invest in the fixed-rate debt issued by the government of the specified country, denominated in euros. Each of the funds is physically backed with full transparency to the underlying holdings. The funds track their respective indices using a sampling methodology and are re-balanced monthly. Each comes with a total expense ratio (TER) of just 0.20% pa.

The ETFs providing exposure to sovereign debt from Austria, Belgium, Finland, the Netherlands and Spain are the first of their kind in the world.

The eight funds are based on the Barclays Single Country Euro Treasury Bond Index family offering broad representation to all eligible government bonds issued by each specific eurozone country. These indices are not constrained by minimum or maximum credit rating requirements, but only bonds with a minimum remaining time to maturity of one year and a minimum amount outstanding of €300 million are included.

Commenting on the launch, Axel Lomholt, Head of iShares Product Development EMEA, said: “Investors are allocating to fixed income in a more granular way than ever before. This new series of single-country eurozone debt exposures will allow them to invest and express their views in a more precise fashion. The ETFs can be used to overweight or underweight bonds in fixed income portfolios on a country basis, according to an investor’s risk and return expectations and objectives, as well as to implement core allocations.”

Lomholt added: “The launch of this series makes iShares the first provider in Europe to offer multiple single country eurozone sovereign exposures under one roof. It remains our priority to build out our fixed income product range, and further funds will be developed in response to investor demand.”

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